Standard & Poor's has raised the pressure on Shell to improve its corporate governance, warning the oil giant that its credit rating will be cut unless "effective" reforms are introduced.

Standard & Poor's, which cuts its ratings on Royal Dutch/Shell debt after the reserves debacle at the Anglo-Dutch company, said that it had ended a review of whether further downgrades were needed.

However, while reaffirming its revised grades, the ratings agency warned that the outlook for Shell's debt was "negative" and cautioned the company over the risks of maintaining current corporate procedures.

Emmanuel Dubois-Pelerin, the Standard & Poor's credit analyst, said: "The ratings on Shell could be lowered should the group fail to effectively correct its weaknesses in corporate governance and internal controls."

The warning follows demands from investors for Shell to simplify its complex structure and repair breaks in lines of accountability blamed for the company's admission this year that 23 per cent of its reserves were not "proven". Pressure from investors forced Shell last month to issue details of a review it is undertaking into its corporate governance.

Mr Dubois-Pelerin added that Shell's rating could also be reduced if it failed to replace in reserves significantly more oil than it extracted.

Standard & Poor's estimates that Shell's bookings of proved reserves will "significantly exceed" production this year as projects in Kazakhstan, Norway and, potentially, Australia come on line. Shell is also expected to rebook as proven some of the downgraded oil stocks.

Shell shares stood 1.25p lower at 395.75p in afternoon trade.

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